LEGO Group Market Performance - Report Example

The name LEGO has been derived from the Danish word “leg god”, which means play well. It has designed toys based on the themes of popular movies like Toy Story, Harry Potter, and Star Wars to name a few. Apart from toys, the LEGO group has also built theme parks named LEGOLAND in several countries which brings a whole new experience to the family. Currently, LEGO is ranked as the 4th largest toy manufacturing company in the world (LEGO, 2011).

Situation analysis is the process through which a company can analyze its internal and external factors and depending on these factors it can eventually decide the growth prospect of the company (Business perspectives, 2006). A situation analysis for the LEGO group can be the key factor in understanding the market trend and consequently designing a strategy to counter the situation created through the unorganized business procedure (Loudon, Stevens, & Wrenn, 2004, p. 155).

Strength:
- LEGO’s biggest strength has been its LEGO bricks which have been the most sought-after product of the company.
- The values set by the founder have always remained intact with the company even after 8 decades.
- International expansion has increased the customer base and market share for the company.
- LEGOLAND has successfully given the LEGO group new heights in its brand image and popularity graph.
- Products of the company are sold in around 130 countries across the globe.

Weakness:
- LEGO Group has failed to build an organizational culture keeping employees in mind.
- Lack of appropriate strategies to sustain growth.
- A wrong person is appointed for a crucial position in the company.
- LEGO’s toys are largely sold during the Christmas season only.
- The company lacked a good distribution channel.
- Apart from the products based on the themes of movies no other products could create a steer in the minds of customers.
- Lacks a good promotional strategy to create better awareness of the products.

Opportunity:
- Outsourcing the production in countries like India & China will be cost-effective for the company.
- Apart from the usual toys, the electronic games market can be a good opportunity for the company.
- Development of new products as per customer preferences.
- Building strong brand equity through innovation and creativeness.

Threat:
- Other regional and international toy manufacturers can create a serious threat to the company.
- Internal communication can impose a serious threat to the well-being of the LEGO group.
- The rise in prices of raw materials.
- Increase in employee turnover rate.
- Macroeconomic factors like inflation, taxes, unemployment, etc. can also be a threat to the growth prospect of the LEGO Group (Marketing analysis, 2011).

Value chain analysis helps in analyzing the situation related to a company’s competitive gain over its counterparts (Dess, 2009, p. 77). Value chain analysis can be described in the following segments or categories:

Inbound Logistics: LEGO group over the years has been successfully managing all its inbound logistics but has somehow failed to convert these activities into value-oriented products and the result leading to heavy loss (Malek, 2009).